Business Articles Research

State Banks Outperform Nation

Net earnings for commercial banks and thrifts in Oklahoma fell only slightly in the third quarter of 2008 while financial institutions across the nation showed significant drops in earnings, Federal Deposit Insurance Corp. figures show.Commercial banks and thrifts nationwide reported net income of $1.7 billion in the third quarter of 2008, down 94 percent from the $28.7 billion they earned in the same quarter last year, the FDIC reported. The industry’s quarterly return on assets fell to 0.05 percent, compared to 0.92 percent a year earlier. This is the second-lowest quarterly ROA reported by the industry in the past 18 years.Oklahoma banks and thrifts, however, earned $749 million in the quarter, a decline of only slightly more than 1 percent from the $757 million they earned in the same quarter in 2007.Net earnings for commercial banks in the state dropped to $534 million, a 9.5 percent decrease from $590 million in the third quarter of 2007, and earnings for saving institutions jumped more than 28.7 percent from $167 million to $215 million.“We’ve had profound problems in our financial markets that are taking a rising toll on the real economy. (This) report reflects these challenges,” said FDIC Chairman Sheila C. Bair. The FDIC said higher provisions for potential loan losses were the primary reason for the drop in profits. Loss provisions totaled $50.5 billion, compared to $16.8 billion in the third quarter of 2007. The industry also reported $7.6 billion in actual losses on sales of securities and other assets in the third quarter, compared to gains of $77 million in the comparable period of 2007. The banking industry’s malaise is even greater than the year-over-year figures indicate. Net income in the third quarter of 2007 was off by almost 25 percent from the previous year. In the third quarter of 2006, the industry’s profits totaled $38.1 billion – more than 22 times the figure reported by the FDIC. The complete Quarterly Banking Profile and state-specific data are available from the FDIC Web site.Southwest Bancorp, Inc. has reported preliminary government approval of its application for the sale of up to $70 million in preferred shares and related warrants for the purchase of $10.5 million of its common stock under the U.S. Treasury’s Capital Purchase Program.The Treasury’s Capital Purchase Program is a voluntary program designed to help healthy institutions build capital to support the U.S. economy by increasing the flow of financing to creditworthy U.S. businesses and consumers.“We believe that participation in the Capital Purchase Program will help us achieve our strategic goal of building long-term shareholder value during these uncertain times,” said Rick Green, president and CEO. “We expect that the additional long-term capital funds now available through the Capital Purchase Program, along with the funds we received from our $34.5 million sale of trust preferred securities in July, will help us take better advantage of opportunities for prudent loan growth while continuing to maintain appropriate capitalization.”Southwest currently exceeds all applicable regulatory capital requirements and each of its banking subsidiaries meets the criteria for regulatory classification as “well-capitalized.”Completion of the issuance of preferred shares and warrants under the Capital Purchase Program is subject to certain standard conditions and is expected to occur before year end. Southwest Bancorp, with total assets at Sept. 30, 2008 of $2.8 billion, is the financial holding company for Stillwater National Bank and Trust Co., Bank of Kansas, SNB Bank of Wichita, Healthcare Strategic Support, Inc., and Business Consulting Group, Inc. Arvest Bank announced neither it nor Arvest Bank Group, Inc, its parent holding company, would apply for capital funds available through the Capital Purchase Program administered by the U.S. Treasury. “Arvest evaluated the provisions of the Capital Purchase Program carefully and made a business decision not to apply for the funds due to the strength of our balance sheet and our capital exceeding federal standards for being well-capitalized” said Kevin Sabin, president and CEO of Arvest.“While the current economic environment and outlook is certainly challenging to many banks and customers, we intend to remain a well-capitalized bank servicing the borrowing, depository, investment and transactional needs of the many customers we serve,” said Sabin.“Arvest has sufficient capital needed to fund expansion and to support the borrowing needs of our customers. The trade territories in which we operate have avoided the worst of the real estate issues experienced elsewhere and we are optimistic these markets will continue to have healthy local economies,” he said.“While we have chosen not to apply for capital funds through the CPP, Arvest will participate in the Temporary Account Guaranty Program. This program provides full FDIC deposit insurance protection, regardless of balance, for non-interest-bearing transaction accounts and for certain demand deposit accounts which pay less than half-percent interest. This expanded coverage will extend through Dec. 31, 2009,” said Sabin.The Temporary Account Guaranty Program is independent of CPP and does not involve a federal government investment or other funds.Arvest Bank had total assets of $9.82 billion as of Sept. 30, 2008, with total shareholders equity of $961.6 million.Scottrade, a leading branch-supported online investment firm, is launching a branch seminar program at many of its more than 375 branch office locations across the country.These informational sessions are available at no cost to the public and cover investing topics ranging from basic order types, to intermediate options to an overview of Scottrade’s active trader platform, ScottradeELITE.Beginning Dec. 15, branch offices in cities across the country, including Tulsa, will offer branch seminars. Although Scottrade does not give advice on what to trade, the seminars offer a small-scale setting in which participants can learn more about how to trade. They also provide a unique opportunity for attendees to build relationships with other investors in their areas.Scottrade is expanding its online education efforts by introducing new interactive financial planning calculators.Jo Ann Stall, vice president and BSA compliance officer at F&M Bank & Trust Co. in Tulsa, has been named an “Honors Graduate” of the 2008 Oklahoma Bankers Association Compliance School.Stall was selected for the Compliance School honor based on her work on the school’s exam and her contributions to and participation in class. She was chosen by the school’s regents, staff, faculty and students.Stall was among 43 students who attended the school at Oklahoma State University. The annual school helps bank employees cope with the many laws and regulations that affect bank lending and deposit functions.